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Converting a local Ksh loan into US$ loan any advise from Wazuas?
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Philanthropist
#1 Posted : Monday, June 03, 2013 1:08:09 PM
Rank: Hello

Joined: 5/31/2013
Posts: 6
I have a loan of Ksh 10m with a local bank with a repayment plan of 8 years. I have requested it to be converted into a dollar loan account as my income is in this currency. Though reluctantly, the bank has promised to review my request with the following conditions.

1. The loan must be repaid within 4 years – (meaning increase my monthly repayment amount of which I wanted it reduced so that; I save some funds to flow into developing the property I used the loan to purchase)

2. It will consider an interest rate of not less /more than 11% (my current rate is over 20%, (I am OK with this!) though I understand that the US$ loan interest rate could be as low as 8%.

Wazurian’s wise advice is needed here. Are there other options available locally with contact that could support my hunt? please let me know.

Thanks.
Whoops!
Being aware of your surroundings is the first step to avoiding slips, trips and falls.
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mwekez@ji
#2 Posted : Monday, June 03, 2013 2:24:58 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
Philanthropist wrote:
I have a loan of Ksh 10m with a local bank with a repayment plan of 8 years. I have requested it to be converted into a dollar loan account as my income is in this currency. Though reluctantly, the bank has promised to review my request with the following conditions.

1. The loan must be repaid within 4 years – (meaning increase my monthly repayment amount of which I wanted it reduced so that; I save some funds to flow into developing the property I used the loan to purchase)

2. It will consider an interest rate of not less /more than 11% (my current rate is over 20%, (I am OK with this!) though I understand that the US$ loan interest rate could be as low as 8%.

Wazurian’s wise advice is needed here. Are there other options available locally with contact that could support my hunt? please let me know.

Thanks.


My bank, I&M, can give you at c9% (slightly over/below that depending on your negotiating power). They will however also charge you a one time processing/commitment fee of c1% flat which am sure your current bank wont charge you coz you are just converting an already existing loan
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mwekez@ji
#3 Posted : Monday, June 03, 2013 2:27:30 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
cc @Banker
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kizee1
#4 Posted : Monday, June 03, 2013 11:05:51 PM
Rank: Member

Joined: 9/29/2010
Posts: 679
Location: nairobi
Philanthropist wrote:
I have a loan of Ksh 10m with a local bank with a repayment plan of 8 years. I have requested it to be converted into a dollar loan account as my income is in this currency. Though reluctantly, the bank has promised to review my request with the following conditions.

1. The loan must be repaid within 4 years – (meaning increase my monthly repayment amount of which I wanted it reduced so that; I save some funds to flow into developing the property I used the loan to purchase)

2. It will consider an interest rate of not less /more than 11% (my current rate is over 20%, (I am OK with this!) though I understand that the US$ loan interest rate could be as low as 8%.

Wazurian’s wise advice is needed here. Are there other options available locally with contact that could support my hunt? please let me know.

Thanks.


good idea, as long as you can back all repayments with your salary,

a KES loan is actually a bad idea for you as your wages are paid in USD(well unless off course the KES is weakening sharply wherein it would mean you get ever more kes for your usd's)

so what you would be doing is buying kes and selling USD(in theory and practice)

hope that helps

p.s 11% is pretty steep for a USD loan(libor being at 1% odd) but guess sovereign risk is what is hurting you...

i wonder if your employer has an ability to lend you, maybe through a Sacco etc, at a more preferential rate
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Rollout
#5 Posted : Tuesday, June 04, 2013 1:33:18 AM
Rank: Member

Joined: 4/26/2011
Posts: 759
kizee1 wrote:
Philanthropist wrote:
I have a loan of Ksh 10m with a local bank with a repayment plan of 8 years. I have requested it to be converted into a dollar loan account as my income is in this currency. Though reluctantly, the bank has promised to review my request with the following conditions.

1. The loan must be repaid within 4 years – (meaning increase my monthly repayment amount of which I wanted it reduced so that; I save some funds to flow into developing the property I used the loan to purchase)

2. It will consider an interest rate of not less /more than 11% (my current rate is over 20%, (I am OK with this!) though I understand that the US$ loan interest rate could be as low as 8%.

Wazurian’s wise advice is needed here. Are there other options available locally with contact that could support my hunt? please let me know.

Thanks.


good idea, as long as you can back all repayments with your salary,

a KES loan is actually a bad idea for you as your wages are paid in USD(well unless off course the KES is weakening sharply wherein it would mean you get ever more kes for your usd's)

so what you would be doing is buying kes and selling USD(in theory and practice)

hope that helps

p.s 11% is pretty steep for a USD loan(libor being at 1% odd) but guess sovereign risk is what is hurting you...

i wonder if your employer has an ability to lend you, maybe through a Sacco etc, at a more preferential rate



Great advise! Infact the fact that his salary is in dollars and he is investing that salary in Kenya through the loan, by default he is hedged from depreciating shilling..... I would bet on depreciating shilling against the dollar than the other way round, based on everything we can see from the world markets and Kenyan budget gap.
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mwekez@ji
#6 Posted : Tuesday, June 04, 2013 9:33:09 AM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
mwekez@ji wrote:
cc @Banker
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youcan'tstopusnow
#7 Posted : Tuesday, June 04, 2013 11:50:58 AM
Rank: Chief

Joined: 3/24/2010
Posts: 6,779
Location: Black Africa
mwekez@ji wrote:
mwekez@ji wrote:
cc @Banker


Jamaa went AWOL. He has a ton of questions on his to-do list, should he return.
GOD BLESS YOUR LIFE
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Philanthropist
#8 Posted : Tuesday, June 04, 2013 1:36:41 PM
Rank: Hello

Joined: 5/31/2013
Posts: 6
@cc @Banker and mwekez@ji, thanks guys for your responses. I totally agree that it was wrong to take the loan in Ksh; however, by then, I had no idea (foolishness) that I could access a us$ loan, my employer has no in-house leading incentive unfortunately!
@ Mwekezi@ji: I have tried to reach out I&M and see what they will advise. I did contact TMC Africa, floated my proposal; they promised to get back to me! I hope they do; TMC is an independent brokerage firm based at the GREENHOUSE along Ngong Rd, once I get more info, I will post it for the benefit of other borrowers in the same situation! http://www.tmcafrica.com/
Whoops!
Being aware of your surroundings is the first step to avoiding slips, trips and falls.
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  | | Edit by user: Tuesday, June 04, 2013 1:39 PM | Reason: Not specified
kizee1
#9 Posted : Tuesday, June 04, 2013 1:47:35 PM
Rank: Member

Joined: 9/29/2010
Posts: 679
Location: nairobi
9% is quite fair for a usd loan in kenya
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mwekez@ji
#10 Posted : Tuesday, June 04, 2013 2:23:17 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
youcan'tstopusnow wrote:
mwekez@ji wrote:
mwekez@ji wrote:
cc @Banker


Jamaa went AWOL. He has a ton of questions on his to-do list, should he return.


Jamaa anafaa atokelezee. His to-do in-tray has really piled
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